What are Ghost Assets?

Do ghosts exist? Yes, no, or maybe, but ghost assets do exist. They are in your records, but you tend to ignore their presence and end up in trouble.  

Any asset that is lost, stolen, or unusable but is still listed as active on your fixed asset register is referred to as a “ghost asset.” For example, a broken printer, unused computers, stolen goods, anything of this sort can be listed under the ghost asset category.  


How do Ghost assets harm the business?  

Ghost assets affect the business and workflow. As explained above, they are the assets that are physically unavailable but exist in the records. Such assets may cause harm for businesses. Imagine how much time an employee might lose trying to locate the asset which is recorded in the files. In turn, it would affect productivity and waste time. Taxes are also being paid for such assets and money is being wasted for no reason.  

How to identify Ghost assets? 

Business records can be used to locate and get rid of ghost assets. No matter how big or small the business is, the authorities are required to keep records from the beginning. Avoiding ghost assets can be made easier by updating every single and minute change.  

Businesses frequently fail to recognize the need to eliminate unused or stolen goods from the records until it is too late. The fundamental procedures for locating ghost assets are linked to record maintenance. Regularly update, manage, and monitor your business records.

Benefits of eliminating Ghost assets.    

  • Reduces tax amount 
  • Reduces Insurance  
  • Increases productivity and Saves time 
  • Accurate financial reports 
  • Saves money 
  • Improved and effective financial forecasting 

Unattended ghost assets can cause stress and uncertainty. Track your records and eliminate such assets from the records, soon.  

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Cash flow vs Trial Balance. Which one to trust?

Cash flow and Trial balance are two different yet connected terms that are familiar to everyone involved in the business. Discussions have been going around for a very long time to decide which is better or which one to trust. Take another look at both before moving on to conclusions based on the knowledge you already have. 

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Cash Flow 

The simplest definition of cash flow is the movement of money into and out of business. A cash flow statement is a financial report that notes the sources of income and expense details of the company in each period. The income is categorized as Cash inflow while the expenses are generally called outflows. It is as important as any other financial statement. 

  • Sales revenue 
  • Interests from investments 
  • Other investments 
  • Royalties 
  • Licensing agreements and more.  

A cash flow statement provides a detailed image of the company’s performance for the period. It also assists in; 

  • Study of liquidity and solvency 
  • Position of cash 
  • Allocation of cash 
  • Short and long-term planning 
  • Efficient cash management 
  • Comparative study 
  • Analyzing cash flows from different activities separately.  

The cashflow report also consists of operating, Financing, and investing activities. Inflow and outflow are the subparts of operating activities.

Trial Balance 

Trial balance is a report that shows the balances of each general ledger account in the company. Also, it is to be noted that a trial balance is not a proper financial statement, but it aids as the base in preparing the same. The accounts shown on a trial balance include: 

  • Assets 
  • Liabilities 
  • Equity 
  • Revenues 
  • Expenses 
  • Gains
  • Losses 

A trial balance is different from a general ledger. While the general ledger reflects all the transactions by the account, the trial balance shows only the account totals. Separate transactions are not mentioned in a trial balance. It is prepared only for internal use only.  

Uses of Trial Balance 

  • Trial balance statement assists in identifying the balance of debit and credit entries in the general ledger.  
  • Any possible errors can be identified and rectified.  
  • Additionally, it also helps in making the necessary adjusting entries to the general ledger.  
  • Trial balance is used as a basis for preparing financial statements.  

Cash Flow or Trial Balance? 

The Cash Flow statement is a record of the inflow and outflow of cash in the company. It aids in understanding and analyzing financial performance, which in turn assists in financial planning and influences making the right decisions. The trial balance is an overall record, and it is not even a proper financial statement.  

In conclusion, cash flow statements help companies better in finance-related matters.  
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